II 

115TH CONGRESS 

1ST SESSION S. 1628 

To revise counseling requirements for certain borrowers of student loans, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 25, 2017 

Mr. GRASSLEY (for himself, Mrs. ERNST, and Mr. FRANKEN) introduced the 

following bill; which was read twice and referred to the Committee on 

Health, Education, Labor, and Pensions 

A BILL 

To revise counseling requirements for certain borrowers of 

student loans, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Know Before You Owe 

5 Federal Student Loan Act of 2017’’. 

6 SEC. 2. PRE-LOAN COUNSELING AND CERTIFICATION OF 

7 LOAN AMOUNT. 

8 Section 485(l) of the Higher Education Act of 1965 

9 (20 U.S.C. 1092(l)) is amended— 


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1 (1) in the subsection heading, by striking ‘‘EN2 TRANCE COUNSELING’’ and inserting ‘‘PRE-LOAN

3 COUNSELING’’; 

4 (2) in paragraph (1)(A)— 

5 (A) in the matter preceding clause (i), by 

6 striking ‘‘a disbursement to a first-time bor7 rower of a loan’’ and inserting ‘‘the first dis8 bursement of each new loan (or the first dis9 bursement in each award year if more than one 

10 new loan is obtained in the same award year)’’; 

11 and 

12 (B) in clause (ii)(I), by striking ‘‘an en13 trance counseling’’ and inserting ‘‘a coun14 seling’’; 

15 (3) in paragraph (2)— 

16 (A) by striking clause (i) of subparagraph 

17 (G) and inserting the following: 

18 ‘‘(i) an estimate of the borrower’s pro19 jected loan debt-to-income ratio upon grad20 uation, calculated using— 

21 ‘‘(I) the best available data on 

22 starting wages for the borrower’s pro23 gram of study, if available; and 

24 ‘‘(II) the estimated total student 

25 loan debt, including Federal debt and, 


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1 to the best of the institution’s knowl2 edge, private loan debt already in3 curred, and the estimated future debt 

4 required to complete the program of 

5 study; and’’; and 

6 (B) by adding at the end the following: 

7 ‘‘(L) A statement that the borrower should 

8 borrow the minimum amount necessary to cover 

9 expenses and that the borrower does not have 

10 to accept the full amount of loans for which the 

11 borrower is eligible. 

12 ‘‘(M) A warning that the higher the bor13 rower’s debt-to-income ratio is, the more dif14 ficulty the borrower is likely to experience in re15 paying the loan. 

16 ‘‘(N) Options for reducing borrowing 

17 through scholarships, reduced expenses, work18 study, or other work opportunities. 

19 ‘‘(O) An explanation of the importance of 

20 graduating on time to avoid additional bor21 rowing, what course load is necessary to grad22 uate on time, and information on how adding 

23 an additional year of study impacts total in24 debtedness.’’; and 

25 (4) by adding at the end the following: 


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1 ‘‘(3)(A) In addition to the other requirements 

2 of this subsection and in accordance with subpara3 graph (B), each eligible institution shall ensure that 

4 the student manually enter, either in writing or 

5 through electronic means, the exact dollar amount of 

6 Federal Direct Loan funding under part D that 

7 such student desires to borrow. 

8 ‘‘(B) The eligible institution shall ensure that 

9 the student carries out the activity described in sub10 paragraph (A)— 

11 ‘‘(i) in the course of the process used by 

12 the institution for students to accept a student 

13 loan award; 

14 ‘‘(ii) prior to the institution certifying a 

15 Federal Direct Loan under part D for disburse16 ment to a student (other than a Federal Direct 

17 Consolidation Loan or a Federal Direct PLUS 

18 loan made on behalf of a student); and 

19 ‘‘(iii) after ensuring that the student has 

20 completed all of the pre-loan counseling require21 ments under this subsection.’’. 


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1 SEC. 3. REQUIRED PERIODIC DISCLOSURES DURING PERI2 ODS WHEN LOAN PAYMENTS ARE NOT RE3 QUIRED. 

4 Section 433 of the Higher Education Act of 1965 (20 

5 U.S.C. 1083) is amended— 

6 (1) by redesignating subsection (f) as sub7 section (g); and 

8 (2) by inserting after subsection (e) the fol9 lowing: 

10 ‘‘(f) REQUIRED PERIODIC DISCLOSURES DURING PE11 RIODS WHEN LOAN PAYMENTS ARE NOT REQUIRED.— 

12 During any period of time when a borrower of one or more 

13 loans, made, insured, or guaranteed under this part or 

14 part D is not required to make a payment to an eligible 

15 lender on the borrower’s loan from that eligible lender, 

16 such eligible lender shall provide such borrower with a 

17 quarterly statement that includes, in simple and under18 standable terms— 

19 ‘‘(1) the original principal amount of each of 

20 the borrower’s loans, and the original principal 

21 amount of those loans in the aggregate; 

22 ‘‘(2) the borrower’s current balance, as of the 

23 time of the statement, as applicable; 

24 ‘‘(3) the interest rate on each loan; 

25 ‘‘(4) the total amount the borrower has paid in 

26 interest on each loan; 


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1 ‘‘(5) the aggregate amount the borrower has 

2 paid for each loan, including the amount the bor3 rower has paid in interest, the amount the borrower 

4 has paid in fees, and the amount the borrower has 

5 paid against the balance; 

6 ‘‘(6) the lender’s or loan servicer’s address, toll7 free phone number, and webpage for payment and 

8 billing error purposes, including information about 

9 how a borrower can make voluntary payments when 

10 a loan is not in repayment status; 

11 ‘‘(7) an explanation— 

12 ‘‘(A) that the borrower has the option to 

13 pay the interest that accrues on each loan while 

14 the borrower is a student at an institution of 

15 higher education or during a period of 

16 deferment or forbearance, if applicable; and 

17 ‘‘(B) if the borrower does not pay such in18 terest while attending an institution or during 

19 a period of deferment or forbearance, any accu20 mulated interest on the loan will be capitalized 

21 when the loan goes into repayment, resulting in 

22 more interest being paid over the life of the 

23 loan; 

24 ‘‘(8) the amount of interest that has accumu25 lated since the last statement based on the typical 


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1 installment time period and the aggregate interest 

2 accrued to date; and 

3 ‘‘(9) an explanation that making even small 

4 payments of any unspecified amount while the bor5 rower is a student at an institution of higher edu6 cation, or during a period of deferment or forbear7 ance, if applicable, can help to offset interest accrual 

8 over the life of the loan.’’. 

9 SEC. 4. CONFORMING AMENDMENTS. 

10 (a) PROGRAM PARTICIPATION AGREEMENTS.—Sec11 tion 487(e)(2)(B)(ii)(IV) of the Higher Education Act of 

12 1965 (20 U.S.C. 1094(e)(2)(B)(ii)(IV)) is amended— 

13 (1) by striking ‘‘Entrance and exit counseling’’ 

14 and inserting ‘‘Pre-loan and exit counseling’’; and 

15 (2) by striking ‘‘entrance and exit counseling’’ 

16 and inserting ‘‘pre-loan and exit counseling’’. 

17 (b) REGULATORY RELIEF AND IMPROVEMENT.—Sec18 tion 487A of the Higher Education Act of 1965 (20 

19 U.S.C. 1094a) is amended by striking ‘‘entrance and exit 

20 interviews’’ and inserting ‘‘pre-loan and exit interviews’’ 

21 each place the term appears. 

Æ 


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